Two approaches to legalized gambling are cheek-by-jowl on the Gulf Coast. In Mississippi, casinos have been left to the marketplace, and in Louisiana, they’re much more tightly regulated.
Louisiana’s policy has worked, more or less, since the early 1990s, when an earlier oil price bust prompted state lawmakers to embrace gambling and its potential revenues. There were setbacks, as when former Gov. Edwin W. Edwards was accused and convicted of influence-peddling for casino licensees.
The state gets more now from gambling than from oil production.
For the first time in decades, another game has become part of the mix as online fantasy sports make their entrance. The online wagering was approved last year in 47 of 64 parishes. But because Louisiana does regulate betting, how tight is the regulation going to be?
The Legislature has to decide that this year. And a difficulty is that these are online games, a departure from the brick-and-mortar casinos and truck stops. Those more traditional venues are significant Louisiana employers as well as direct revenue sources.
A million-dollar campaign largely bankrolled by the two major sports fantasy companies — DraftKings and FanDuel — helped win approvals in the fall referendums. Both operate games where fans make online wagers, typically on smartphones. They are headquartered in Boston and New York.
The proposition won by lopsided margins throughout south Louisiana, including 61 percent in East Baton Rouge Parish, 73 percent in Orleans Parish and 69 percent in Jefferson Parish.
The likely legislative vehicle for deciding how fantasy sports betting will be regulated in Louisiana is House Bill 450 by state Rep. Kirk Talbot, R-River Ridge. It proposes a laughably small tax rate, with a $10,000 fee for the online companies to get a license and 10 percent of revenues from the betting.
Talbot’s bill is certainly going to be the subject of intense interest, although there are others by state Rep. Neil Abramson, D-New Orleans. Talbot's bill last year authorized the parish votes allowing fantasy sports betting.
Abramson has proposed an 8 percent tax rate on net revenue. He said that is based on the rules in Mississippi, which has both online fantasy sports and sports betting, and is drawing Louisiana residents for both.
But why should DraftKings and FanDuel, which have no operations in Louisiana, pay a lower rate than the gambling establishments that are already here — employing people and paying taxes?
Casinos and video poker pay twice to three times those rates on revenues. A video poker truck stop may pay up to 32 percent and provides jobs for Louisiana workers.
The revenues from fantasy sports betting are going to be a small percentage of gambling revenues. The Louisiana Fiscal Office estimates $375,000 in new revenues; the Harrah's casino in downtown New Orleans alone generates $60 million.
Still, the issue in the Legislature is tax rates.
Talbot told The Advocate that the tax rate he suggested was based on that in other states but is negotiable. We suggest that the Legislature negotiate it in an upward direction.